Annual administration returns

Annual administration returns (IGPS7)

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  1. INTRODUCTION

    1. At the end of each financial year AFSA is required to report to the Parliament on the operation of the Bankruptcy Act 1966.  This report is submitted to Parliament by the Minister.  The annual administration return (“AAR”) is primarily used to collect information on the operation of the Act from debt agreement administrators, controlling trustees and registered trustees (“practitioners”).
    2. The obligation for practitioners to lodge an AAR is set out as follows:
      • trustees and controlling trustees: section 70-5 of the Insolvency Practice Schedule (Bankruptcy) (“the Schedule”; Schedule 2 of the Bankruptcy Act)
      • debt agreement administrators: section 185LEA of the Bankruptcy Act.
    3. AFSA also uses the AAR process for the following purposes:
      • calculation of the annual realisations charge liability for money received by practitioners based on data disclosed on the AAR
      • reconciliation of any realisations charge paid during the year with the annual liability (also refer Realisations and interest charges)
      • selection of administrations for inspection.
    4. Information from the Official Trustee on the operation of the Bankruptcy Act is collected via a separate process.
  2. AAR FORMAT

    1. The AAR is in the form of a spreadsheet and must be completed and submitted online via AFSA’s AAR Online service.  Information to assist online users can be found on the AFSA website.
    2. The AAR form for debt agreements is different to the form for other insolvency administrations, as the data set required is different.  Examples are shown in the annexures (see annexure A for administrations other than debt agreements and annexure B for debt agreements).
    3. Practitioners can obtain their AAR from AAR Online.  Alternatively, to minimise data entry efforts, practitioners may configure their systems to export the required AAR data to a compliant format AAR.  If a trustee is also an administrator, they are required to complete two AAR forms – one for their debt agreements and the other for their administrations as trustee.
    4. An AAR obtained from AAR Online will be auto-populated with the following details:
      • names of the administrations managed by the administrator/primary trustee during the AAR period
      • opening bank balances, previously deferred realisations charge or interest charge for each of those administrations
      • finalisation dates of those matters that were finalised during the year
      • most recently lodged AAR data for the administration, if there has already been a lodgment during the AAR period.
    5. An AAR must contain the acceptable column and heading layout and be in an xls and xlsx file extension.  Additional columns may be added and will not affect the AAR submission.
    6. An AAR form may be submitted with one administration or thousands of administrations.  Multiple submissions of AAR forms are allowed.
    7. When an AAR is submitted online, any errors or discrepancies found with the AAR data will be displayed.  Trustees and administrators must ensure administrations with AAR data issues are corrected and AAR data resubmitted before the deadline date.
    8. An AAR form may be submitted at any time, including updating previous AAR submissions for an administration.  The last successful lodgment will be used.
    9. Amendments may be made to AAR lodgments from previous AAR periods to correct any mistakes.  For example, if an opening balance for an administration is different on a later AAR the closing balance on the earlier AAR can and should be amended.
    10. The due date for AARs to be lodged by practitioners is within 25 business days after the end of the financial year.[1]
  3. AAR PROCESS

    1. There are essentially three steps in the AAR process:
      1. Obtaining the AAR forms.  Practitioners can log in to AAR Online to obtain an AAR for a full or partial year (based on AAR lodgment status, administration type or a single administration number).
      2. Submitting AAR forms.  AAR forms are required to be completed and submitted via AAR Online before the due date.  A series of checks are performed upon submission of AAR forms to ensure data integrity.  Practitioners must ensure any errors identified are corrected and AAR forms resubmitted before the due date.
      3. Realisations charge and interest charge reconciliation.  A realisations charge and interest charge liability for each trustee or administrator is determined from submitted AAR form.  Payments of realisations charge and interest charge made by the practitioner throughout the year are applied to the liability.  Any underpayment must be paid before the due date.
  4. AAR TIMEFRAME

    1. The AAR process is designed to fit in with annual reporting requirements of government.  It is a time critical process and needs to be managed to meet staff, stakeholder and government expectations.  General timeframes for each of the 3 steps are:
      1. Week

        Event

        July (first week)

        Practitioners can obtain their AAR listing their full year required lodgments from AAR Online

        August (first week)

        Practitioners must submit completed AARs to AAR Online

        August (third week)

        Complete AAR data processing for annual reports and complete RC underpayment/overpayment reconciliations

    2. Practitioners are issued reminders in the weeks preceding the due date for lodgment.
  5. EXTENSION REQUESTS

    1. The process has been designed to allow practitioners a 5-week period in which to complete and lodge their AARs.  Given the tight timeframes for government reporting, extensions of time for lodgment of AARs are only granted in limited circumstances.
    2. There may be special circumstances (for example: temporary loss of records due to system problems) where an administrator or trustee may not be able to comply with the four-week timeframe.  In these circumstances, an extension of time may be granted upon written application to the Inspector-General or a delegate.  Such applications should be forwarded to PractitionerSupervision [at] afsa.gov.au for consideration.
  6. LATE LODGMENT

    1. Practitioners are required by law to lodge an AAR for each administration.
    2. The failure to provide this information can have an adverse impact on the credibility of the insolvency system.
    3. A practitioner who fails to lodge an AAR on time is subject to a penalty under the Bankruptcy Act.  A debt agreement administrator commits an offence of strict liability with a penalty of 5 penalty units (or 1 penalty unit infringement notice) under section 185LEA (subsection 277B(2) Item 12) of the Bankruptcy Act.  A registered trustee must pay a late lodgment fee by way of penalty under subsection 70-5(4) of the Schedule.
    4. In the first instance, after the passing of the lodgment date, contact will be made by AFSA with the practitioner to enquire about the non-lodgment.

ANNEXURE A – AAR INSTRUCTIONS FOR TRUSTEES

  1. For annual administration return spreadsheets for trustees, see AAR Online.
  2. Important notes

  3. For every administration reported on the AAR each column, except Finalisation Date and Comments, must contain a value (for example: $0.00 or the actual value).
  4. When the AAR form has been obtained from AAR Online, columns marked with “*” in the table below are auto-populated or auto-calculated.
  5. Minimum trustee remuneration under former section 161B

  6. Where a practitioner has received a payment from the debtor under the former section 161B of the Bankruptcy Act, for a bankruptcy administration that commenced before 1 December 2010, that receipt need not be brought into account in the estate and should not be included in any of the columns in the AAR.  No realisations charge is payable on that receipt.
  7. Section 188 authorities and PIAs

  8. Where a practitioner was a controlling trustee for a section 188 authority that later became a PIA during the same financial year, there will be two entries in the AAR.  Any third party money held in trust pending the outcome of a PIA proposal need not be brought into account in the section 188 administration, except for the amount of costs and fees that are received by the practitioner in the capacity as controlling trustee.
  9. Financial transactions (if any) that occurred during the controlling trustee period should be entered against the section 188 administration and financial transactions that occurred under the PIA need to be entered under the PIA administration.  Receipts under a section 188 or a PIA should be reported at column 15 as “Other Receipts” if it attracts the realisations charge or column 18 “Other receipts not subject to realisations charge” if that receipt does not attract the realisations charge.  Any money transferred from the section 188 administration into a PIA administration should be reported using columns 9 “Funds transferred from another practitioner” and 31 “Funds transferred to another practitioner”.
  10. This will ensure that the realisations charge is only levied once on the same money.
  11. Administrations with more than one estate

  12. Where there is more than one estate in an administration (e.g. a joint bankruptcy with the husband’s estate, wife’s estate and a joint estate), there is only one entry in the AAR for the administration.  If there were transactions in each of the estates, the practitioner must add the information from the separate estates and insert the combined estate totals against the single administration.
  13. Administrations with joint trustees

  14. Where there are joint trustees in administration, the administration will only appear in the AAR of the trustee who is the primary trustee and the primary trustee should file the lodgment.  The other trustee (i.e. the secondary trustee) will not see this administration and should not request it from AFSA.
  15. Missing or extra administrations

  16. If there are administrations missing from the AAR or administrations for which the practitioner is not responsible, the practitioner should advise AFSA.
  17. Practitioners should contact AFSA immediately if they believe any of the data that are auto-populated in your AAR form are incorrect

*Row 1

AAR period

This cell is pre-filled with the AAR financial year period for the administrations for which the practitioner will be submitting AAR data.  When an AAR form is submitted, the year must match the online selected AAR period.

 

Practitioner number

This cell is pre-filled with the practitioner registration number for the administrations for which the practitioner will be submitting AAR data.  When an AAR form is submitted, the practitioner registration number must match the online selected practitioner registration number.

 

AAR rate

This cell is pre-filled with the applicable realisations charge rate for the AAR financial year period for which the practitioner will be submitting AAR data.  This is used for the automatic calculation of realisations charge due for an administration.

*Columns 1-7

Administration details

These columns are pre-filled with details of administrations that were active at any time during the financial year and for which the practitioner was the primary trustee at any time during the financial year, as per AFSA’s records.

*Column 8

Opening balance

The column is pre-filled with the closing balance reported for the administration in the practitioner’s previous AAR.

Note 1: Opening balances will not pre-fill for the 2014-15 AAR period.

Column 9

Funds transferred from another practitioner

Where an administration has been transferred to a practitioner along with money held in the estate, the amount received needs to be inserted here.  AFSA may cross-reference this entry with money transferred out by the other trustee.

Column 10

Gross sale price of assets

Where a practitioner has sold assets in a bankruptcy or Part XI administration, the gross asset value is reported here.

Example: a practitioner sold a house property for $500,000 and, after the deduction of agent’s commission/settlement fees of $20,000, outstanding water/council rates of $5000 and mortgage of $400,000, the trustee received a net amount of $75,000 in the estate.  The figure that gets reported in this column is $500,000.

Note: receipts are to be shown excluding the GST component, if any.  E.g. sale of business plant and equipment $11,000 including $1000 GST: only $10,000 should be shown in this column and the GST component of $1000 should be shown in column 18 (“Other receipts not subject to realisations charge”).

Column 11

Recoveries from antecedent transactions

Any receipts in relation to recoveries under sections 120, 121 and 122 of the Bankruptcy Act are reported in this column.

Column 12

Contributions collected

All income contributions received from bankrupts are reported in this column.

Column 13

Sec 73 composition receipts

Any composition monies received are reported in this column.

Column 14

Trading receipts

Where a practitioner has continued to trade a debtor’s/bankrupt’s business, the value of any trading receipts (net of GST) are shown in this column.  (Do not include sale of business assets in this column – these are shown at column 10.)  Trading payments are shown at column 21.

Column 15

Other receipts

Where there are other types of receipts (e.g. rents, dividends, royalties, income tax refunds, GST refunds, insurance premium refunds) that are subject to the realisations charge, they need to be reported here.
Note: any receipts that received in a s188 or PIA need to be reported in this column.

*Column 16

Total receipts subject to realisations charge

This column automatically calculates the total receipts for the administration that are subject to realisations charge.

Column 17

Interest earned on estate funds

If a practitioner has earned interest on estate money, it is reported in this column.  This information is used to calculate the practitioner’s interest charge liability.  Bank fees and charges paid are disclosed at column 25.

Note: some trustees maintain a single bank account for all their estates and the interest earned on that single bank account is not required to be apportioned amongst the various estates.

Column 18

Other receipts not subject to the realisations charge

If a practitioner has certain receipts that are not subject to the realisations charge (e.g. creditor advances/indemnities/GEERS/FEG receipts/GST collected on sale of business assets), these are reported in this column.

*Column 19

Total receipts

This column automatically calculates the total receipts in an administration.

Column 20

Amount paid to secured creditors

Where a practitioner has paid secured creditors from the sale proceeds of assets, the amounts paid are reported in this column.  Using the example shown in the notes to column 10, the amount of $5000 paid for the outstanding water/council rates (these rates are usually secured against the property) and $400,000 paid to the mortgagee would be reported in this column.

Column 21

Trading payments

Where a practitioner has continued to trade a debtor’s/bankrupt’s business, the value of any trading payments (payments to suppliers, wages to employees etc.) net of GST are shown in this column.

Column 22

Costs of administering the estate

All costs of administrations are reported in this column.  These include expenses such as legal fees, selling agents’ commissions, settlement fees, brokerage on sale of shares etc.  Using the example in the notes for column 10, the selling agent’s commission and settlement fees of $20,000 would be reported in this column.

Note: all expenses recorded should include the GST component (if any).

Column 23

Trustee’s remuneration

Any remuneration drawn by the practitioner in the capacity as trustee or controlling trustee are reported here.

Note: where an administration has been transferred by another trustee and you are required to make a payment to the previous trustee for their fees, that fee amount should not be shown in this column but included as “Other Payments” at column 26.

Column 24

Dividends paid to creditors

All dividends that were paid to creditors are reported here.  This includes any employee creditor dividends but does not include payments made to employees out of Fair Entitlement Guarantee (“FEG”) money received from the Attorney-General’s Department (these are recorded in column 26) or payment of petitioning creditors’ costs.

Note: FEG  was previously known as the General Employee Entitlements and Redundancy Scheme (“GEERS”) and was managed by the Department of Employment and Workplace Relations.

Column 25

Bank fees and charges

Bank fees and charges are shown in this column.  This information is used to calculate the practitioner’s interest charge liability.  Bank fees and charges include account keeping or account service fees, transaction fees, direct debit fees and cheque deposit fees, whether transactions were electronic, phone, internet or at a branch.  They do not include dishonour fees (cheque or direct debit), overdrawn account fees, financial institutions duty, bank account debits tax or withholding tax, balance enquiries or additional statements.

Column 26

Other payments

All other payments made out of an administration need to be recorded here.  This could include payments like petitioning creditor costs, GEERS/FEG payments to employees, income taxes, net GST on sale of assets etc.

Column 27

Realisations charge payments

The amount of realisations charge payments that you have already paid during the AAR period needs to be recorded here.  This does not include realisations charge payments you intend on making after submission of the AAR.

Column 28

Interest charge payments

The amount of interest charge payments, if attributable to an administration, that you have already made during the AAR period needs to be recorded here.

Column 29

Refund of surplus to debtor

Where there was a surplus in an estate and a refund has been made to the debtor/bankrupt during the financial year, the refund amount is recorded here.

*Column 30

Total payments

This column automatically totals all the payments made from the administration during the AAR period.

Column 31

Funds transferred to another practitioner

Where a practitioner has transferred an administration with money to another trustee, the amount transferred needs to be reported here.  AFSA may cross-reference this with the money reported as received by the other trustee.

*Column 32

Closing balance

This column automatically calculates the closing balance in the administration based on the receipts and payments in the previous columns.  This balance should be the same as the balance of the administration’s estate account.

*Column 33

Realisations charge deferred previous period

This column is pre-filled from / validated against the realisations charge deferred to next period that was reported for the administration in the previous AAR.

*Column 34

Realisations charge due for current period

This column automatically calculates the total realisations charge that is due based on the realisations charge liable receipts and exempt payments that the practitioner has reported in the previous columns.

Note: under subsection 6(1A) of the Bankruptcy (Estate Charges) Act 1997, no charge is payable in respect of a particular administration if the amount of realisations charge calculated as due for a charge period is less than $10.  If a practitioner chooses to not pay the realisations charge because it is less than $10, an amount of zero is reported here.

Column 35

Realisations charge deferred to next period

Where a practitioner intends to defer payment of the realisations charge due for the administration, this must be reported here.  Section 280 of the Bankruptcy Act allows for realisations charge to be deferred to the next AAR period if the realisations charge is less than $50 and the administration is not finalised.  A partial deferral of realisations charge is not allowed.

*Column 36

Realisations charge liability for the period

This column automatically calculates the total realisations charge liability, including any previously deferred realisations charge.  If payment of realisations charge is being deferred to the next AAR period or the amount of realisations charge is not being paid due to being less than $10, a liability amount of zero is reported here.

*Column 37

Interest charge deferred previous period

This column is pre-filled from / validated against the interest charge deferred to next period that was reported for the administration in the previous AAR.

*Column 38

Interest charge due for current period

This column automatically calculates the interest charge that is due based on the interest earned and bank fees/charges entered at columns 17 and 25 respectively.

Note: under subsection 5(1A) of the Bankruptcy (Estate Charges) Act 1997, no charge is payable in respect of a particular administration if the amount of interest charge calculated as due for a charge period is less than $10.  If a practitioner chooses to not pay the interest charge because it is less than $10, an amount of zero is reported here.

Column 39

Interest charge deferred to next period

Where a practitioner intends to defer payment of the interest charge due for the administration this must be reported here.  Section 280 of the Bankruptcy Act allows for interest charge to be deferred to the next AAR period if the interest charge is less than $50 and the administration is not finalised.  A partial deferral of interest charge is not allowed.

*Column 40

Interest charge liability for the period

This column automatically calculates the total interest charge liability, including any previously deferred interest charge.  If payment of interest charge is being deferred to the next AAR period, the liability will be zero.

Column 41

Finalisation date

Where a practitioner has finalised an administration during the year, the date of finalisation needs to be recorded in this column.

Note: an error will be displayed if a finalisation date is supplied and:

  • the administration has a closing balance
  • it is s188 administration
  • the practitioner has transferred an estate to another trustee
  • it does not fall within the AAR period being lodged
  • the practitioner has reported a deferral to next period of realisations or interest charge.

Column 42

Comments

Optional comments can be reported here.  This may be helpful when resubmitting new AAR data for an administration or when amending an AAR for a previous period.

ANNEXURE B – AAR INSTRUCTIONS FOR ADMINISTRATORS

  1. For annual administration return spreadsheets for administrators, see AAR Online.
  2. Important notes

  3. For every administration reported on the AAR, each column, except Finalisation date, Total value of creditor claims and Comments, must contain a value (for example, $0.00 or the actual value).
  4. When the AAR form has been obtained from AAR Online, columns marked with “*” in the table below are auto-populated or auto-calculated.
  5. Missing or extra administration

  6. If there are administrations missing from the AAR or administrations that the practitioner is not responsible for, the practitioner should advise AFSA.
  7. The practitioner should contact AFSA immediately if they believe any of the data that are auto-populated in the AAR form are incorrect.

*Row 1

AAR Period

This cell is pre-filled with the AAR financial year period for the administrations for which the practitioner will be submitting AAR data.  When an AAR form is submitted, the year must match the online selected AAR period.

 

Practitioner number

This cell is pre-filled with the practitioner number for the administrations for which the practitioner will be submitting AAR data.  When an AAR form is submitted, the practitioner number must match the online selected practitioner number.

 

AAR rate

This cell is pre-filled with the applicable realisations charge rate for the AAR financial year period for which the practitioner will be submitting AAR data.  This is used for the automatic calculation of realisations charge due for an administration.

*Columns 1-6

Administration details

These columns are pre-filled with details of administrations that were active at any time during the financial year and the practitioner was the administrator at any time during the financial year, as per AFSA’s records.

*Column 7

Date proposal was lodged with Official Receiver

This column is pre-filled with the date the debt agreement proposal was lodged with the Official Receiver.  This date is relevant for determining which debt agreements attract the realisations charge and interest charge.

*Column 8

Opening balance

The column is pre-filled with the closing balance reported for the administration in the previous AAR.

Note: opening balances will not pre-fill for the 2014-15 AAR period.

Column 9

Funds transferred from another practitioner

Where a debt agreement has been transferred from another administrator (including from the Official Trustee), the money, if any, that was transferred with that debt agreement needs to be entered in this column.

Column 10

Debt agreement payments collected

Receipts from debtors during the course of the year are shown in this column.

These receipts attract the realisations charge if the debt agreement arose from a proposal that was lodged with the Official Receiver on or after
1 July 2007.

Column 11

Other receipts not subject to realisations charge

Where an administrator receives any other type of money in relation to the debt agreement, it is shown in this column.  These types of receipts will be rare but could include instances where a dividend cheque was returned unpresented by a creditor or where a person returns a dividend cheque that may have been issued by the administrator in error.  These types of receipts do not attract the realisations charge.

*Column 12

Total receipts

This column automatically calculates the total receipts that the practitioner has had in an administration.

Column 13

Expenses

Where a practitioner makes any payments to cover expenses in relation to the debt agreement, these amounts are entered in this column.  An example of such an expense will be where a cheque received from the debtor under the debt agreement payment plan is dishonoured and the bank charges a dishonour fee.

Column 14

Administration fees

Any fees drawn by the practitioner during the course of the financial year are reported here.

Column 15

Dividends paid to creditors

The total dividends paid to creditors during the financial year are shown in this column.

Column 16

Other payments

Where the practitioner has made any other payments in relation to the debt agreement, the amount needs to be shown in this column.  Such payments will be rare but may include for instance a dividend cheque that was returned in a previous financial year and reissued in the current financial year.

Column 17

Realisations charge payments

The amount of realisations charge payments that the practitioner has already made during the AAR period need to be recorded here.  This does not include realisations charge payments the practitioner intends on making after submission of the AAR.

Column 18

Refunds to debtor

Any refunds paid to the debtor are recorded in this column.  Entries in this column would be extremely rare but could arise where creditors withdraw their claims or total receipts from the debtor are more than sufficient to complete the agreement.

*Column 19

Total payments

This column automatically totals all the payments made from the administration during the AAR period.

Column 20

Funds transferred to another practitioner

If the administration of a debt agreement has been transferred to another administrator (including to the Official Trustee), any money that was transferred as part of the administration needs to be recorded here.

*Column 21

Closing balance

This column automatically calculates the closing balance in the administration based on the receipts and payments disclosed in the previous columns.  This balance should be the same as the administration’s bank balance.

*Column 22

Realisations charge deferred previous period

This column is pre-filled from / validated against the realisations charge deferred to next period that was reported for the administration in the previous AAR.

*Column 23

Realisations charge due for current period

This column automatically calculates the total realisations charge that is due based on the realisations charge liable receipts that are reported in the previous columns.

Note: under s6(1A) of the Bankruptcy (Estate Charges) Act 1997, no charge is payable in respect of a particular administration if the amount of realisations charge calculated as due for a charge period is less than $10.  If the practitioner chooses to not pay the realisations charge because it is less than $10, an amount of zero is reported here.

Column 24

Realisations charge deferred to next period

Where the practitioner intends to defer payment of the realisations charge due for the administration, this must be reported here.  Section 280 of the Act allows for realisations charge to be deferred to the next AAR period if the realisations charge is less than $50 and the administration is not finalised.  A partial deferral of realisations charge is not allowed.

*Column 25

Realisations charge liability for the period

This column automatically calculates the total realisations charge liability, including any previously deferred realisations charge.  If payment of realisations charge is being deferred to the next AAR period or the amount of realisations charge is not being paid due to being less than $10, a liability amount of zero is reported here.

Column 26

Finalisation date

Where the practitioner has finalised the administration of the debt agreement (for example, where all distributions have been made and the administrator has no further duties under the agreement), the date of the last distribution to creditors is to be inserted in this column as the finalisation date.

Note: the finalisation date is not the date of completion; where the debtor has made all payments under the agreement to the administrator.

Column 27

Total value of creditor claims

Where a debt agreement has been reported as finalised, the total value of claims by creditors is supplied here.

Column 28

Comments

Optional comments can be reported here.  This may be helpful when resubmitting new AAR data for an administration or when amending an AAR for a previous period.

Footnotes

[1] Paragraph 70-5(3)(b) of the Schedule